Talking to your parents about their money

Steve Chiotakis: As Stacey just reported, it's not uncommon for family members to send money back to their relatives. It's part of the cultural calculation of living abroad.

But there's another money conversation that happens a lot in families. Or, at least should. The point when roles reverse, and children start looking after their elderly parents. It can be pretty tough to approach an aging parent about their finances.

Penelope Wang is editor at large at Money magazine. This month's issue focuses on how to start that conversation. Penelope, thanks for being here.

Penelope Wang: Thank you, it's great to be here.

Chiotakis: What are some of the problems older people can face as they deal with financial issues?

Wang: They can run into several different kinds of problems. Number one, I guess, the health issues. Sometimes as people get older, they can run into cognitive problems that make it harder for them to manage money. Also, people are now trying to manage to survive on retirement incomes they have to manage themselves, unlike previous generations which had pensions. And that can create a lot of new unfamiliar situations that they may be trying to cope with.

Chiotakis: What can happen in the long run? Tell us some, I hate to say it, some nightmare stories.

Wang: Well, worst case scenarios can be that someone can suffer Alzheimer's or some for dementia and totally mismanage their finances, fall prey to scam artists who often prey on the elderly and end up in a terrible financial situation.

Chiotakis: Are elderly people actually singled out because of their vulnerability?

Wang: Yeah, that's what a lot of state attorneys general are concerned about, that people prey on the elderly, because they perceive as being more vulnerable. Of course, there are plenty of sharp elderly people, but they also tend to have more money than younger people, so they'll go after the money.

Chiotakis: As a child of parents who are getting up there in age, how does one broach this subject without sounding condescending or even forceful?

Wang: Well, that's the trick. It's a delicate balancing act. You don't want to make them feel that you don't trust in their abilities or don't respect what they've achieved, while at the same time, letting them know that you're available to help them if they need it. And what most experts say is you start talking, it's not a matter of one conversation, but repeated conversations over time, where you mention your concerns about their finances or talk about your own finances as a way of getting them to engage you in a discussion.

Chiotakis: If mom or dad agree, Penelope, to include you in on the financing, who needs to be in on that conversation?

Wang: Well, everybody in the family, the siblings, should all be taking part in the conversation or at least being made aware of the issues. Though it often ends up being that one sibling or one or two siblings, usually those who live most closely to the parents, may end up, perhaps, becoming the signatories on their accounts or becoming the legal representative, having durable power of attorney in the case of an emergency. But it's something that should be shared with other key members of the family so they don't feel left out or that you don't inadvertently create bad feelings.

Chiotakis: This is so common, I mean most people have to deal with this, right? I mean, we all have parents and thank goodness we have parents who've survived and live into, hopefully, old age. Why are we still having issues dealing with this? Is it a changing economy, is it a changing way we think about things?

Wang: It's a lot of those things, absolutely. There are just more elderly people. The population is aging, so it's becoming more and more common for people to be in a situation of having to help parents who are older. It's also a tough economy, where there's more stress over finances and worries over making your money last through retirement. And there's also just, I guess you could call it a regulatory or structural issue where it's complicated to be able to get access to parents' information, often for good reason. But sometimes the rules that are created to protect us can also get in the way. In the case of an emergency, if you have a parent you're worried about, but you don't have all the paperwork in place.

Chiotakis: It's more complicated now in this electronic age where you're trying to get access to information. Does that make it harder than it was say 50, 60 years ago?

Wang: Technology can be a helpful tool in these situations, provided you go through all the steps that you need to get access to the information and your parents are comfortable with that. But having online tools that allow you to monitor your parents' account, keep track of some big spending entries that you don't quite understand, that you might be worried about, that can be very helpful.